Open sourcing of agrochemical raw materials to boost investment: Businesses

Domestic agrochemical manufacturers expect increased local and foreign investment after the government removed restrictions on sourcing raw materials under the new Import Policy Order.

The move follows a reduction in duties on imported raw materials for agrochemical products in the current fiscal year's budget. The new policy also removes the requirement for manufacturers to source raw materials from a specific country or supplier.

For years, the Department of Agricultural Extension had required manufacturers to follow a "single country, single source" system. This prevented them from importing cheaper raw materials from other suppliers in the same country or from suppliers in other countries.

The Import Policy Order, issued by the Ministry of Commerce last week, has now scrapped the restriction.

Under Clause 30(8), the Ministry of Agriculture and its agencies cannot specify one or more sources for importing products as part of efforts to promote Good Agricultural Practices in Bangladesh, in line with the World Trade Organization's Trade Facilitation Agreement.

The order also says the agriculture ministry may prepare and publish a list of inputs and raw materials required to manufacture registered pesticides and pest-control products. 
Manufacturers will be allowed to import the quantities needed for production.

Bangladesh's pesticide market is estimated at nearly Tk15,000 crore, with multinational companies and finished-product importers controlling about 92% of the market.

Previously, local manufacturers faced a total tax burden of about 58% on imported raw materials. In the latest budget, duties of up to 15% were retained for only 36 raw materials, while duties on most other raw materials were reduced to zero.

KSM Mostafizur Rahman, president of the Bangladesh Agrochemicals Manufacturers Association, told TBS that the duty cuts and removal of sourcing restrictions have created significant investment opportunities.

"Opening up sourcing under the new Import Policy Order has created huge investment opportunities in the agrochemical manufacturing sector," he said.

Mostafizur Rahman, also managing director of National AgriCare, said his company has secured land in a Beza economic zone to expand production and plans to export agrochemical products to countries in Asia, Europe and Africa.

He said the new policy would encourage existing manufacturers to expand and attract foreign investment, urging the agriculture ministry and stakeholders to consult manufacturers and quickly prepare the list of required raw materials to ensure effective implementation of the policy.

Manufacturers allege that restrictions imposed by the Department of Agricultural Extension had created barriers for local producers while benefiting multinational companies and finished-product importers.

Although 22 manufacturing companies have been approved, around 1,340 companies have been allowed to import finished products.